Corporate Structures

Single Member Company (SMC Private Limited)

A single-member company (SMC) in Pakistan is a private business with only one member or director, offering the benefits of limited liability. The advantages of having a single-member company include:

⦁ In terms of the law, SMC is distinct from its members.
⦁ The member’s liability is capped at the amount of his investment.
⦁ When a member passes away, the firm continues to exist.
⦁ SMCs pay a lesser amount of company tax.
⦁ An SMC’s only member has exclusive authority over all corporate operations.

Public Limited Company

In Pakistan, a Public Limited Corporation can be formed by three or more individuals for legal purposes. Like Private and Single-Member companies, the founders must sign a Memorandum of Association, and the company must comply with the regulations of the Companies Act.

Public limited companies in Pakistan can be either listed or unlisted. The key difference is that listed companies offer their shares for public purchase, while unlisted companies do not sell shares to the public.

Private Limited Company (PLC)

In Pakistan, a Private Limited Company (PLC) sits between a partnership business and a publicly held public company. It can be registered with a least two individuals. The company and its stockholders each have their own legal identities. The board, which the shareholders choose, works with the CEO to make operational decisions for the business. Depending on its size, a PLC can also need a company secretary, legal counsel, and auditor.

⦁ In terms of the law, SMC is distinct from its members.
⦁ The member’s liability is capped at the amount of his investment.
⦁ When a member passes away, the firm continues to exist.
⦁ SMCs pay a lesser amount of company tax.
⦁ An SMC’s only member has exclusive authority over all corporate operations.

Limited Liability Partnership (LLP)

A key difference between a Limited Liability Partnership (LLP) and the traditional partnership under the Partnership Act 1890 is that, in an LLP, each partner is not liable for the negligence or misconduct of another partner. In an LLP, partners are only partially personally liable for the firm’s obligations. They are not responsible for the actions or torts committed by other partners, although they may be liable for contractual debts depending on the jurisdiction.

It is important to note that public limited companies are established for public purposes, with shares issued under limited liability. These shares can be bought through public offerings and the stock market.

In Pakistan, public limited companies can be either listed or unlisted. The key difference is that a listed company offers its shares for public purchase, while an unlisted company does not sell shares to the public.

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